RE: Purchase Order Freight with Landed Cost
Hi Misty,
Great question. So, with GP there is as you noticed two types of freight you can record. One for the freight on the overall PO and one that can be added per line which is the landed cost freight. Both can be used if you so choose to, but both have a different purpose. Let me explain the difference and get to your question.
1. Freight on the PO itself on the bottom right-hand side of the PO entry window. This is a basic freight that you expect to incur for ordering items from the vendor and for them sending the goods to you. If you use this freight field, you can expect that when you INVOICE it will hit an expense account and you, the company will be incurring those costs. The freight cost can be entered on any invoice against the PO or none at all. It's not required even if on the PO. If you forget to enter the freight on the invoice it will just be missed, and people could just address it in Payables and adjust the account. However, you are using this more as an approval process and moving toward using Landed cost. So, let's move on to what LC does.
2. Landed Cost Feight. This is too a freight cost that is incurred, but instead of you, the company, expensing the cost of the freight you pass that cost into the cost of the item you are purchasing and therefore passing the cost onto the customer. This is recorded at the time you enter and post the Shipment. The landed cost on the shipment is more so an "estimate" because you might not know the EXACT cost of the freight, but if/when you invoice/match the landed cost, you can mark to revalue your landed cost. If there is a cost is difference between the invoice and shipment, the system will adjust the item's cost appropriately.
Again, these features can be used at the same time. So, what happens then if you have both the freight populated on the PO (which you don't intend to really expense (bottom right-hand side (not landed cost)) and will also have items with LC on them. So, in this scenario, the land cost on the items will continue to process, but that freight at the bottom of the PO won't or doesn't have to be populated on the invoice. If you didn't populate the freight on the invoice, it would just sit on the PO until the PO is closed. The PO will still close when all lines have been shipped and invoiced even if you don't do anything with the freight in that scenario. The closing of the PO has more to do with the Lines and if they have been invoice/matched. And the Freight although is on the PO is not required when you do the invoice.
Hope this helps explain how it works! If you have more questions let me know.
Thanks for using community forums.
Angela Ebensteiner
Sr. Technical Advisor
Microsoft
Share
Report
15
All responses (
Answers (
